Satisfying customers. Overview. Turnaround times. Customer feedback

Transcription

1 SATISFYING CUSTOMERS Satisfying customers Overview Customer service is one of our core strategic pillars. In an effort to extend the reach of the IDC, to get closer to its stakeholders and clients and to proactively develop new business opportunities, IDC has set up regional offices throughout South Africa. The IDC now has a very well established footprint throughout the country with a total of 13 regional offices in all provinces serving our clients close to home. Customer feedback In order to gain insight from our customers, the IDC conducts various surveys as part of its performance measurement. Included in our corporate performance target is the customer satisfaction index which is measured through the TRI*M index value. This is determined through a survey as well as an IDC reputation indicator which is measured through the RepTrak Pulse index value (measured every two years). At regional level, IDC conducts an annual survey amongst stakeholders to determine their perception of regional office effectiveness and the perception of IDC as a whole. The results for the three surveys are summarised below: IDC Customer satisfaction survey TRI*M focuses on the ability of IDC to retain its customers. In 2013 the IDC scored 86 points compared to 89 points in The 86 points scored places IDC in the Strong Relationship category of the Index. IDC Stakeholder survey RepTrak. The IDC has specific stakeholder groups which it needs to manage in order to build its reputation. By utilising a consistent index to measure all key stakeholders, the IDC now has a powerful tool that is able to identify problem areas which can inform proactive steps to address these potential reputational risks. The study measured the current perceptions of a selected group of stakeholders in order to improve its reputation among these stakeholders. The IDC obtained a score of 69 points. The score indicates that the IDC has a strong reputation amongst its key stakeholders. The score is 17 points higher than the benchmark company and is higher than the 2012 Global Industry mean. Regional Stakeholder Perception Survey The 2013 survey results, with a sample of 500 stakeholders from all the provinces of South Africa, concluded: The IDC is well known across all regions. The IDC mandate was also well articulated and the organisation is regarded as the market leader across all the regions; The IDC is most liked for accessibility, helping SMEs grow, professionalism and staff expertise among other factors; Dislikes associated with the IDC included rejection of small projects, poor turnaround time at application stage and that the requirements are seen to be cumbersome; Stakeholders generally have positive perceptions of the IDC on the criteria above; and Likelihood of engaging the IDC in the future as well as recommending it is very high across all regions. Turnaround times The IDC has taken a number of steps to address concerns from our customers that the Corporation takes too long to assess project applications and that this process is cumbersome to funding applicants, particularly for smaller projects. The IDC funding process is clearly defined with approved systems and procedures. IDC has set clear targets as to time requirements for each step in the process from receiving applications, completing basic assessments, conducting due diligence, approval of funding, legal agreements and signing thereof. Each step along this process is measured in terms of turnaround time. Applications for finance are received at IDC head office in Sandton or in the IDC regional offices and are registered at source. The applications are then dealt with in the regional offices or the Pre Investment Business Centre (PIBC) for Gauteng applications, up to the completion of a basic assessment (which includes the gathering of relevant information and the testing of key assumptions). The completed basic assessments, together with a positive or negative recommendation, are then passed on to the relevant SBU, who in turn conduct a due diligence and present a report for approval or rejection to the relevant 115

2 Industrial Development Corporation of South Africa Limited Turnaround times (continued) approval authority. Post approval legal agreements are drawn up, sent to the client and signed. IDC allows itself 90 calendar days for the completion of this whole process. During July 2011, the IDC approved an initiative to conduct non-complex transactions with a target of 15 to 17 working days to complete these transactions, measured from start of due diligence to legal agreements having been sent to the client. In a further effort to improve on efficiencies and specifically turnaround times, the IDC launched the Pre-Investment Business Centre (PIBC) at its head office in Sandton in 2011 specifically to deal with all enquiries, walk-ins, applications and basic assessments for Gauteng customers. PIBC conducts both Initial Screenings (mandate, strategy and financial viability tests), as well as Basic Assessments for all Gauteng applications. Assistance to compile business plans is also made available through referrals to the IDC website (Business Plan Tool), Seda or via the use of IDC Business Support consultants. Regional offices together with PIBC now deal with around 80% of all IDC applications and basic assessments and it is envisaged that this percentage will increase to about 90% going forward. All the abovementioned initiatives have contributed extensively in reducing the overall IDC turnaround times. The measured turnaround times for non-complex transactions improved by 37% for the past financial year compared to the previous corresponding period. This improvement means the corporate target of 17 working days for processing non-complex transactions was reached. Although it is clear from the above statistics that turnaround times have improved significantly, IDC is committed to improve on these numbers in the future and is continuously looking for ways to ease the process of applying for funding. IDC funding process Pipeline Assessment and decision Monitoring Application from existing/prospective businesses Proactive identification and development of projects Detailed duediligence/feasibility study assessing development impact and sustainability of opportunities: development outcome Market for products/ services technical viability and competitiveness Financial viability Management Ongoing monitoring of client performance after funding is made available Interventions in businesses experiencing difficulties Business support restructuring of facilities Structuring of funding depending on client s needs Approval of viable transactions at appropriate committee 116

3 satisfying customers Products and funds Products and funds The IDC provides financial assistance for the development of new business, expansions or rehabilitation of existing businesses. The business case must exhibit economic merit (i.e. it must be profitable). IDC considers the cash-flow of a company and the financial forecasts to demonstrate economic viability and profitability within a reasonable period and sufficient cash flows to repay the investment over a reasonable period of time. The IDC finances fixed assets and the fixed portion of growth in working capital requirements. Funding can be structured utilising a wide array of instruments including: debt, equity, quasi-equity, guarantees, trade finance, bridging finance, venture capital and project funding. The funding is structured in a way that will suit the business needs most appropriately. Structuring options include: funding term (short, medium and long-term loans) and payment holidays to allow for periods upfront where no payments need to be made on either capital or interest. A far greater emphasis is placed on the proactive development of projects and this has led to a much improved project pipeline during the past financial year. IDC portfolio exposure to debt, equity and guarantees at cost is indicated below: Product R million % of exposure 31 March 2012 R million 31 March 2012 % of exposure Debt Equity Guarantees Total

4 Industrial Development Corporation of South Africa Limited Development funds Development funds The Development Funds Department (DFD) provides funding support to projects that have a high development impact. It achieves this by managing higher risk-ranking funds and disbursing these funds into deserving projects. DFD manages IDC ring-fenced and third party funds which are allocated to development needs not typically addressed through the standard IDC funding mechanism. The funding schemes support the aims of the New Growth Path set out by the Economic Development Department, employment creation and equity. Funding methods The capital is deployed against strict investment guidelines towards addressing a specified, targeted developmental need. A variety of tools such as softer pricing, structuring terms and relaxation of financial and other norms are used to meet the objectives of the scheme. The capital may be off-balance sheet or on-balance sheet funds. Many of the investment funds under management, being fairly new funds that will not reach maturity in the short term, are difficult to assess for financial sustainability. The funds provide varying degrees of non-financial support through funding shopfloor training and upskilling, mentorship and coaching at employee and management level. This promotes empowerment and sustainable industrial capacity. Fund Purpose Fund size 1 Unemployment Insurance Fund 1 Assist companies that save or create jobs at a cost per job of less than or equal to R per job Financial instrument Amount approved since inception of Fund until R4bn Loan R3.25bn 2 Gro-E 1 Assist companies that create jobs at a cost per job of less than or equal to R per job 3 Women Entrepreneurial Fund 1 Assist female entrepreneurs to start or expand their businesses R10bn Loan/equity R3.5bn R300m Loan/equity R67m 4 People With Disability Fund 1 Assist entrepreneurs with disabilities to start or R50m Loan/equity R11m expand their businesses or to acquire businesses 5 Development Fund 1 Assist workers to acquire meaningful stakes in R350m Equity/quasi R199m IDC-funded transactions 6 Community Fund 1 Assist marginalised poor communities to acquire R150m Equity/quasi R82m meaningful stakes in IDC-funded transactions 7 Equity Contribution Fund 1 Assist new entrant black entrepreneurs with their R150m Equity/quasi R85m equity contributions with regards to IDC-funding requirements 8 Risk Capital Facility 2 Assist with equity type funding to BEE-SMEs that R841m Equity/quasi R692m creates jobs 9 Support Programme for Industrial Innovation 2 Fund the development of new technologies for the SA economy 9.1 Product Process Grant R138m Development (PPD) Matching Scheme (MS) 2 Grant R688m 9.3 Partnership Scheme (PII) 2 Conditional grant (royalty payment if project successful) R251m 10 Technology Venture Capital 2 Commercialisation of innovative products, processes and technologies 1 IDC on-balance sheet 2 IDC off-balance sheet (funds managed on behalf of the dti) R130m Loan/equity/ quasi-equity R25m 118

5 satisfying customers Development funds (continued) Fund Purpose Fund size 11 Manufacturing Competitveness Enhancement Programme Manufacturing Enhancement Programme Working Capital Fund Manufacturing Enhancement Programme Niche Fund 2 12 Green Energy Efficiency Fund 1 Assist manufacturers under SIC 3 to access more affordable working capital facilities Stimulate new or underdeveloped manufacturing sectors Stimulate energy efficiency and renewable energy investments in the commercial and industrial sectors Financial instrument Amount approved since inception of Fund until R765m Loan R216m R200m Loan/equity R8m R500m Loan R174m 13 Pro-Forestry Scheme 1 Support new afforestation and transformation R200m Loan/equity R79m 14 Agro-Processing Linkages Scheme 1 Agro-processing and rural development by linking established agro-processors with resource poor farmers R100m Loan/equity R50m 15 Agro-Processing Fund 3 16 Clothing, Textiles, Leather and Footwear Scheme 1 17 Clothing and Textiles Programme Clothing and Textiles Improvement Programme Production Incentive Programme 2 1 IDC on-balance sheet 2 IDC off-balance sheet (funds managed on behalf of the dti) 3 IDC off-balance sheet (funds managed on behalf of EDD) Facilitate increased competition, growth and development in agro-processing sector; through provision of finance to non-dominant players Fund local players to upgrade their P/E to become globally competitive Improve the competitiveness of the local Clothing and Textiles sector Improve product, processes and people on a cluster basis Funding provided to individual companies for plant and equipment upgrade R250m Loan/equity R207m R500m Loan R350m R522m Grant R366m R3.25bn Grant R1.75bn 119

6 Industrial Development Corporation of South Africa Limited Services Services It is recognised that improving business performance requires many ingredients. These include the creation of a conducive policy environment for enterprise development and competitiveness, creation of structures to access finance and provision of non-financial services including training, consultancy and advisory services, market assistance, information, technology development and transfer, and business linkage promotion. IDC provides a service to its prospective clients, existing clients and general stakeholders through various initiatives, including: Regional Offices, PIBC, Call Centre & Contact Centre, Web-based application system, Business Support Programme (technical support), Advisory services, Project development, Support to National Government and Training. Regional offices provide a range of services to their customers and stakeholders. These services are aimed at developing local entrepreneurs and local economies. These services include; new business development, assessing and screening applications for finance including the completion of basic assessments, participation in local economic development initiatives, identification of localisation opportunities, rural and community development, local government strategic support and capacity building amongst various stakeholders including DFI staff. The Pre-Investment Business Centre (PIBC) provides a professional door into the IDC for potential Gauteng clients by catering for the initial screenings of applications (mandate, strategy and financial viability tests), as well as Basic Assessments. PIBC has a database of other financiers to which unsuccessful applicants can be referred as well as a sound knowledge of all IDC products available to applicants. The IDC call centre deals with telephonic enquiries as well as enquiries via (including online enquiries) from possible applicants, nationally. Web-based application system the Business Plan Tool is part of a bigger initiative that was rolled out this year, where applicants can make enquiries online to the IDC, as well as submit their business plans online. These enquiries and business plans are then routed to each of the regional offices, where they are attended to in the same manner as walk-in enquiries, or calls. This is particularly helpful in instances where applicants are in remote areas, and where physical visits to regional offices or Head Office might not be feasible at enquiry stage. Since the online applications and enquiry system has been launched, more than enquiries and applications have been dealt with already through this medium. Advisory services the regional offices, together with the PIBC, in its interaction with applicants have to advise clients on how to rectify their applications, provide business plan support, refer clients to Seda for business plan preparation, provide advice on dti incentives or to refer them to other funders including DFIs, i.e. sefa or NEF. Regional offices also advise local government on how to proceed with identified projects including linkages with possible investors and providers of technical assistance. Project development a sizeable proportion of applications require a project approach to take it to a bankable stage. These projects are time consuming as it takes years to unfold to implementation stage. IDC approved projects increasingly require regional involvement to assist in the implementation through facilitation of i.e. water rights applications, environmental impact assessments and land restitution issues. Support of national government include the participation in and input at the provincial dti business strategy round table events held in each Province. Regional offices together with the IDC SIP team based in Sandton co-ordinate and facilitate the SIP 5 (Northern Cape Development Corridor) and SIP 8 (Green Energy) events/workshops on behalf of the Presidential Infrastructure Co-ordinating Commission (PICC). Training and coaching a formal internship programme is run through the regional offices which includes the training of matriculants to become qualified secretaries (certificated) as well as the work readiness training of Graduates. Business Support (BS) BS is an expert function that is provided to clients pre and post-investment and supports mainly SBUs, the Post Investment Monitoring Department (PIMD) and Workout and Restructuring Department. The BS functionality is delivered in regions through the regional offices. By using its regional resources in Operations Head Office (OHO) the BSP has increased its BS outreach to IDC clients throughout the country based on BS requests from internal stakeholders. The objectives of the BSP are to: Improve prospects of business partner sustainability; Entrench IDC s developmental role through the provision of pre- and post-investment technical (non-financial) support to augment IDC s financing products; and Ensure proper broad-based black economic empowerment (B-BBEE) participation in IDC investments. 120

7 satisfying customers Services (continued) IDC business support activities comprise three broad functionalities; Business Management (BM), Socio- Economic Development (SED) and Broad-Based Black Economic Empowerment (B-BBEE) verification. Business Support Products include: Pre-investment products Business Plan preparation, BS participation in DDs to determine the clients BS needs, Business Advisory services and Distressed Fund Turnaround Plan assistance. Pre- and post-investment products Diagnosis of business management challenges, establishment and registration of workers and community trusts formation of trusts, Broad-Based Black Economic Empowerment (B-BBEE) and assisting clients to comply with IDC s B-BBEE policy requirements. Post-investment products Mentorship, quality accreditation, accounting software and training and accounting assistance. The total amount of BS funding (client own contribution + grants) committed for the reporting period: Period Client contribution (loan) (Rm) Grant (Rm) Business support monitoring and evaluation Survey Total (Rm) In 2010 Operations Head Office decided to asses and measure the impact of BS services. As a result, for the FYs 2011 and 2012 BSP conducted customer satisfaction surveys to assess the impact of its services across three areas: impact to IDC, impact to client, and impact to employees. In the last three financial years, the Head Office and Regions Department have been engaging the services of an independent and outsourced research company to conduct annual customer satisfaction surveys to determine the impact of the Business Support Programme s intervention to IDC clients. The overall business support (BS) rating out of IDC s corporate 5 point scale was as follows: 3.7 in 2011; 3.8 in 2012 and 3.7 in This indicates that BS performance is stabilising around a 3.7 rating. BSP aspires to average a rating of 4 or more to achieve excellence. Compared to the previous FY, the 2013 FY BS survey results point to improvements in the following general areas: Diagnosis of problems/opportunities; Timeous implementation of the intervention; BS contribution to the sustainability of the clients' businesses; Overall business management of the clients businesses; and Facilitation of skills transfer to the company. These areas of improvement are medium to long term in perspective. However, the results indicate a decline in the more immediate and shorter-term general areas, such as: Communication between the consultants and clients; Quality of reporting; Financial performance, as a result of the intervention; Provision of relevant and quality advice during intervention; and Achievement of the Terms of Reference. Initiatives Walk-In Centre PIBC plans to create a dedicated Walk-In Centre at the IDC. Currently, walk-in enquiries are dealt with on an ad hoc basis. The intention is to create an environment conducive for business plan discussions. This Walk-In Centre will allow prospective applicants to: View the Funding Decision Tree model and see, at a glance, whether the application falls within the IDC mandate. This will also assist the applicant to have a more informed discussion with the IDC consultant; Meet with a PIBC professional staff member (consultant), who will be situated in the Walk-In Centre, without delay; Access the IDC Online Application System, including the Business Plan Tool, in an enclosed environment to ensure privacy whilst working on the business plan; Have access to an IDC professional staff member whilst working on the business plan; and Meet with a sefa representative, if necessary. Funding Decision Tree The Funding Decision Tree is a tool which will assist prospective applicants to do a self-check on whether their application fits the broader IDC mandate. If the application does not fit the IDC mandate, the tool will also refer the applicant to other possible financiers. This tool will furthermore allow Contact Centre agents, as well as other members of PIBC or the Regional Offices, to assist customers more efficiently by taking them through the Funding Decision Tree during an enquiry. PIBC will also 121